Stock Analysis, IPO, Mutual Funds, Bonds & More

Top global brokerages are bullish on these 10 stocks after Q1 results

The overall results of the 50 firms in Nifty pack witnessed a gradual recovery in earnings.

, ETMarkets.com|
Updated: Aug 21, 2018, 05.03 PM IST
ThinkStock Photos
Top five stocks to bet on this week
Net sales of 40 non-BFSI, out of Nifty 50 companies, grew by 23.2 per cent YoY.
NEW DELHI: The June quarter earnings season has come to an end.

The overall results of the 50 companies in the Nifty pack witnessed a gradual recovery largely on account of smaller base in the year ago quarter.

However, some took a hit to their profitability owning to currency volatility and pressure on operational performance given higher commodity prices. Moreover, PSU banks disappointed on the back of higher provisioning along with slippages and mark-to-market losses.

According to Centrum Wealth Research, net sales of 40 non-BFSI (out of Nifty 50 companies) grew by 23.2 per cent year-on-year, whereas net profit grew by 21.3 per cent. Net interest income (NII) of 10 BFSI (out of Nifty 50 companies), grew by 20.4 per cent YoY, while net profit declined by 47.4 per cent.

Bajaj Finance stood best performer in the BFSI space in terms of both in net interest income and net profit. The biggest deterioration in profit terms among BFSI stocks was seen again in State Bank of India (on the back of lower trading income and higher mark-to-market losses).

Among private banks, ICICI Bank reported its first quarterly loss (since its IPO) of Rs 120 crore.

In the non-BFSI segment, Grasim Industries (in net sales terms, second quarter in a row) and Dr Reddy’s Laboratories (in profit terms) stood among the best performing companies. Adani Ports & SEZ was the worst performer in terms of net sales and Tata Motors (which reported a loss on the back of challenges faced by its subsidiary Jaguar Land Rover in UK) was the worst performer in terms of net profit.

With earnings wrapped up, here are 10 companies on which global brokerages have maintained their bullish stance post June quarter earnings:

Dilip Buildcon
Global brokerage firm Citi maintained ‘Buy’ on Dilip Buildcon with a target price of Rs 1,271. The company is one of our top picks in India infrastructure story, according to Citi. It further added that road asset sale to the Shrem group is on track and it is targeting order wins of around Rs 10,000 crore in FY19E.

Sun Pharma
CLSA revised target price for Sun Pharma upward to Rs 750 from Rs 600 earlier. “Specialty launches in the US tracking well and execution will be the key from here on,” said CLSA.

The company posted profit of Rs 982.51 crore for the June quarter of 2018-19. It had posted a net loss of Rs 424.92 crore in the year-ago quarter on account of an exceptional item. The company posted 107.84 per cent year-on-year rise in net profit at Rs 254.89 crore for the quarter ended June 2018 against Rs 122.64 crore in the corresponding quarter last year.

Dewan Housing Finance Corporation (DHFL)
Japanese brokerage firm Nomura believes that ROE improvement should drive re-rating for Dewan Housing. The brokerage firm upgraded DHFL to ‘Buy’ with a target price of Rs 775. “Expect ROEs to improve to 15-16 per cent despite dilution built in FY19F,” Nomura said. Net profit of the company jumped to Rs 435.02 crore in Q1FY19 over Rs 322.42 crore in Q1FY18.

Coal India
Citi maintained ‘Buy’ on Coal India with a target price of Rs 350. “New railway lines are expected to add 30 mtpa of evacuation capacity,” Citi said. The state-run company recently posted a 61 per cent rise year-on-year in its consolidated net profit at Rs 3,786.44 crore for the April-June quarter. It had posted a net profit of Rs 2,350.78 crore in the corresponding quarter of last fiscal.

Tata Steel
Credit Suisse maintained ‘Outperform’ on Tata Steel with a target price of Rs 890. “Bhushan Steel acquisition drove net profit miss for Tata Steel. However, adjusted Ebitda was inline with expectations. India business was also inline with estimates but Europe business remained better than expectations, according to Credit Suisse.

The company more than doubled its net profit at Rs 1,934 crore for the quarter ended June 30 against to Rs 921 crore in the year-ago period.

Cummins India
Engine-maker Cummins India recently reported 17.56 per cent decline in its net profit at Rs 183 crore for the first quarter ended June 30. The company had posted a net profit of Rs 222 crore during the same period of previous fiscal.

However Credit Suisse maintained ‘Outperform’ rating on shares the company with a target price of Rs 850. The global brokerage firm believes the next quarter could possibly carry an upgrade. Sharp correction and under performance over the last two years driving reasonable valuations for

Ipca Labs
Ipca Laboratories reported a standalone net profit of Rs 65.52 crore for the quarter ended June 30, mainly on account of robust sales. The drug firm had posted a net loss of Rs 20.25 crore in the year-ago period. Morgan Stanley maintained ‘Overweight’ on Ipca Labs and raised target price to Rs 853 from Rs 743 earlier.

“Ipca business has stabilised after FDA issues. The company is poised for mid-teens sales growth. We expect steady operating profit margin expansion,” Morgan Stanley said.

Aditya Birla Group flagship Hindalco posted a 42.75 per cent jump in its standalone net profit to Rs 414 crore for the first quarter ended June 30, 2018. The aluminium maker had clocked a standalone net profit of Rs 290 crore in the corresponding period a year-ago.

Macquarie maintained ‘Outperform’ on Hindalco with a target price of Rs 290. “Impeccable performance continues in Q1'19 and the company offers attractive risk-reward at 5.3x EV/EBITDA. We see a strong case for re-rating for Hindalco,” said Macquarie.

State Bank of India
Nomura retained ‘Buy’ on State Bank of India with a target price of Rs 360. “Valuations at 0.9 times are not undemanding. We maintain Buy as corporate cycle improving and core pre-provision operating profit (PPOP) likely to improve,” said Nomura.

The state-run lender last week posted a major loss of Rs 4,876 crore for the first quarter ending June, caused by higher provisioning on account of its accumulated non-performing assets (NPAs), or bad loans. In a stock exchange filing, the SBI said it had earned a net profit of Rs 2,005.5 crore in the same period of last fiscal.

Aditya Birla Capital
Deutsche Bank maintained ‘Buy’ on Aditya Birla Capital (ABCL) with a target price of Rs 190 per share. “Life insurance continues to see strong improvement,” Deutsche Bank said. The company recently reported a 31 per cent rise in net profit for the three months to June at Rs 227 crore on an income growth of 32 per cent at Rs 3,374 crore.

The company's assets under management rose to Rs 3,05,684 crore from Rs 2,62,113 crore, and overall lending book rose to Rs 53,584 crore from Rs 41,066 crore.

Its life insurance and health arm reported a total gross premium of Rs 1,205 crore from Rs 937 crore.
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service